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Why Invest In
Lesotho - Access to Markets
Lesotho is a member of two regional trade agreements, which
are Southern African Customs Union (SACU) and Southern
African Development Community (SADC). There are other
arrangements outside the region which include the agreement
with the EU under the Cotonou and the US under the African
Growth and Opportunity Act (AGOA). Almost all Lesotho’s
exports receive better than most-favoured nations (MFN)
treatment to these markets.
Lesotho is connected to South Africa by road, to the South
African rail network (via Maseru to Bloemfontein) and air
(from Moshoeshoe 1 International Airport in Maseru to Oliver
Tambo International Airport in Gauteng). Lesotho is close to
a number of modern South African facilities which are
essential for any export drive.
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Getting
to Lesotho from South Africa by Road |
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Maseru
to Johannesburg |
455km |
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Maseru
to Durban |
550km |
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Maseru
to Bloemfontein |
155km |
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Maseru
to Cape Town |
1,165km |
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Maseru
to Port Elizabeth |
738km |
The main centre of manufacturing is Maseru, which is 20
kilometres from the South African town of Ladybrand. The
next biggest centre of manufacturing is Maputsoe / Ha Nyenye
which is less than 10 kilometres from the Free State town of
Ficksburg. There are two other centers; one in Mafeteng
(closest South African town is Wepener), and another in
Mohale’s Hoek (closest South African town, Zastron).
1.1.1. SACU
This is a customs union of five states; Botswana, Lesotho,
Namibia, South Africa, and Swaziland. Under this Customs
Union, members enjoy duty-free access to market while on the
other hand extending a common External Tariff against
imports from the rest of the world. Lesotho also as a member
of SACU is benefiting from the free trade agreement
concluded between South Africa and EU, the Trade Development
and Cooperation Agreement (TDCA). Since South Africa is a
member of SACU, the TDCA de facto has to be implemented by
other SACU Member States which Lesotho is in accession.
1.1.2. SADC
All SACU member States are members of SADC. Under this
regional group, Lesotho has some duty concessions in the
SADC Member States. A SADC Trade Protocol came into
operation in 2000 with the intention of moving to a Free
Trade Area in 2008. In this regard, tariffs which will
remain after 2008 will be on those goods that are regarded
sensitive, but those tariffs should be eliminated or be
fully liberalized by 2012. In a nutshell, SADC is
progressing well on the road to trade integration and the
following targets dates still remain on the road map towards
full regional integration; Customs Union in 2010, Common
Market in 2015, Monetary Union in 2016 and single currency
in 2018.
1.1.3. Cotonou
Lesotho has been enjoying preferential access into the EU
market through different Lome Conventions for twenty-five
years which ran until 2000 when it was replaced by Cotonou
Agreement (CA). Under the CA, Lesotho is classified as a
least developed country and its status is enhanced by the
EU’s Everything But Arms (EBA) initiative. Under this
initiative Lesotho enjoys quota and duty-free access to the
EU market for everything except arms. In addition there are
no requirements for reciprocating preferential trading
access to the EU. Since the non-reciprocal aspects of the
ACP-EU is not WTO compliant, the CA makes provision for the
EU to enter into economic partnership agreements (EPAs) with
ACP countries in order to satisfy WTO requirements. Since
the existing system of preferences will continue to apply
for a period of eight years before reciprocity come into
effect, Lesotho and other six SADC Member States are
negotiating as a block EPAs with the EU.
1.1.4. AGOA (African Growth and Opportunity Act)
This is an American initiative that has created preferential
terms of trade on a range of products manufactured in Africa
for the US market. Under AGOA Lesotho could sell all
products duty and quota free to the United States at two
different phases. The first phase of the agreement was the
most beneficial part of the scheme where inputs could be
sourced from the rest of the world (AGOA 1, 2000 – 2004). In
the second phase, (AGOA 2, 2004 – 2008) products can still
be sold to the US duty and quota free. |
